Bitcoin’s Price Climbs Above $20,000 After Sharp Crypto Selloff


The price of bitcoin fell below $ 18,000 on Saturday before bouncing on Sunday night above $ 20,000, a level heavily controlled by cryptocurrency enthusiasts.

Bitcoin rose 10% to $ 20,571.29 on Sunday night after falling to $ 17,601.58 on Saturday afternoon, according to CoinDesk. The digital currency fell below $ 20,000 on Saturday, sparking fears it could fall further. It has lost 70% of its value since its November high.

Concern over Federal Reserve actions to control higher-than-expected inflation has pushed stocks and cryptocurrencies into a bearish market. Big names in the industry, including Coinbase Global Inc.,

CURRENCY 0.33%

the largest U.S. currency exchange, recently announced job cuts.

WSJ’s Dion Rabouin explains why Wall Street is now so committed to cryptography and what it means for the new asset class and its future. Composite photo: Elizabeth Smelov

“Bitcoin breaking the $ 20,000 price level was coming, given the pessimism we have in the market,” said AvaTrade market analyst Naeem Aslam. The aftermath of the collapse of the stablecoin Terra USD in May will continue to spread, he said, and that is a depressing sentiment.

There is no specific meaning for the $ 20,000 level, but the price has fallen below $ 19,783, a previous 2017 mark, according to Coinbase. Bitcoin bulls have long argued that cryptocurrency has entered a new stage of development and acceptance in recent years and will not fall below that 2017 level.

“It will be a great pain for many investors,” said Yuya Hasegawa, market analyst at Japanese cryptocurrency exchange Bitbank Inc. People will lose confidence in the crypto market as a whole, but experienced crypto investors and those who believe their long-term prospects will have the opportunity to buy at discounted prices, he said.

For Wayne Sharp, a retired investment advisor in Columbus, Ohio, the cratered crypto market came as no surprise. She bought about $ 10,000 in bitcoins in 2020 and has been sitting on it ever since, with no plans to sell or buy more. “I have seen many cycles. I’ve been watching this for 45 years, “he said.” We humans have made the same mistakes over and over again. “

Ether, another major cryptocurrency, rose 19% to $ 1,141.52 after falling below $ 1,000 on Saturday. CoinDesk is trading at $ 880.93, the lowest level since January 2021.

Bitcoin’s decline from its all-time high of $ 67,802 in November contributed to an elimination of approximately $ 2 trillion in the broader market. Crypto’s total market capitalization, which peaked in November at nearly $ 3 trillion, stood at about $ 834 billion on Saturday, the lowest since January 2021, according to data provider CoinMarketCap.

Bitcoin traded around $ 30,000 for most of May before falling again in June following a new inflation shock and concerns about rising U.S. interest rates. Investors have been unloading assets considered risky, such as cryptocurrencies and technology stocks.

According to data provider CoinGlass, individual investors received margin calls, with about $ 349.25 million in collateral promised by about 88,415 retailers settled in the last 24 hours. That’s compared to $ 1 billion earlier this week.

More high-flying cryptographic companies have previously felt the pain in what has been called a “cryptographic winter.” Cryptocurrency lender Babel Finance told customers on Friday it was suspending bailouts and withdrawals of all products, citing “unusual liquidity pressures.” One of the largest cryptocurrency lenders, Celsius Network LLC, did not allow users to withdraw funds for about a week, citing extreme market conditions.

The hedge fund focused on cryptocurrencies Three Arrows Capital Ltd. he has hired legal and financial advisors to help find a solution for his investors and creditors after suffering heavy losses from a wide sale in the digital asset market, the company’s founders told The Wall Street Journal.

The sudden reduction in available and expendable capital, often called liquidity, is exacerbating liquidation, and it’s not something that can be easily fixed, said Ryan Shea, an economist at cryptocurrency investment firm Trakx. Unlike traditional markets, “there is no central bank that intervenes and intervenes, the process just has to unfold,” he said.

The rise in cryptocurrency valuations over the past two years has been helped by large investments from companies like Tesla Inc.

TSLA 1.72%

and a period of lower interest rates during the pandemic that encouraged individuals trapped in the home to buy riskier assets in hopes of higher returns.

The interest rate hikes now being enacted by the Fed occur when explosions in some cryptocurrency projects have spread across the ecosystem. The so-called stablecoin TerraUSD broke its $ 1 value last month after intense selling pressure, leaving it and its original sister cryptocurrency, Luna, now almost worthless. While its developers sought to defend the TerraUSD peg, they sold bitcoin reserves, weighing on the price of this and other assets.

Investors in cryptocurrencies have more recently been concerned about a cryptocurrency derivative that is being blocked until the Ethereum network moves to a less energy-intensive model. The so-called ether bet on Lido has been quoted at a discount to the ether itself recently.

“Crypto has a lot of problems. It doesn’t need the macro,” said Noelle Acheson, head of market knowledge at crypto lender Genesis Global Trading, referring to rising interest rates and inflation concerns.

Write to Elaine Yu at elaine.yu@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

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